News Corp. Sells MySpace to Specific Media for $35 Million
By BRIAN STELTER2:35 p.m. | Updated MySpace, the long-suffering Web site that was bought by the News Corporation six years ago for $580 million, was sold on Wednesday to the advertising targeting firm Specific Media for roughly $35 million.
The News Corp., which is controlled by Rupert Murdoch, had been trying since last winter to rid itself of the unprofitable site. In preparation for the change in ownership, many of MySpace’s roughly 400 employees were dismissed on Wednesday. Mike Jones, the Web site’s chief executive, said in an internal memorandum that he would depart in the next two months.
The sale closes a complex chapter in the history of the Internet and of News Corp., which was widely envied by other media companies when it bagged MySpace in 2005. At that time MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure that soon soared to 70 million, but the network could not keep pace with Facebook, which overtook MySpace two years ago.
As users fled MySpace, so too did advertisers. The market research firm eMarketer estimates that the site will earn about $183 million in worldwide ad revenues this year, down from $605 million at its peak, when the site introduced many Web users and many advertisers to the concept of social networking.
“It’s a shame that MySpace’s value has diminished so severely since the acquisition; MySpace’s pioneering of social networking (now referred to as social media) will always be revered as igniting a new medium,” Richard Rosenblatt, the chairman of MySpace at the time of the sale to News Corp., said in an e-mail message.
Instead of envy, the News Corp. bet on MySpace now provokes punchlines. Tom Freston, who was fired as the chief executive of Viacom in part for failing to buy MySpace, joked in an interview with CNBC earlier this year that “I’m still waiting for a thank you note” from the Viacom chairman Sumner Redstone.
Mr. Freston, who was in Iceland on Wednesday and was smiling at the news of an impending sale, declined to comment.
At the News Corp. on Wednesday, relief over the sale was appreciable. An advertising deal with Google helped the company to recoup what it spent on MySpace in the first place, but the site became a burden on the company’s earnings; by last year executives were calling the losses unacceptable.
The News Corp. division that houses MySpace and other digital properties has only turned a profit once in the last six years.
What doomed the site? Lee Brenner, the director of MySpace’s now-defunct “Impact” section, wrote in a blog post on Tuesday, “I’m sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace’s downfall. Any number of these could be true. I suppose we’ll never know for sure. It is most likely a combination of these factors, along with a ‘low attention span’ public. It probably didn’t help to be doing business, and trying to grow, along with all of these issues, in the midst of a global economic crisis.”
MySpace has attempted to reboot itself several times, most recently as a social destination for music, movies and other media. It has not been abandoned altogether; it still has 35 million visitors a month in the U.S., according to the measurement firm ComScore. Facebook has 157 million visitors a month in the U.S.
“It’s still one of the biggest pockets of traffic on the Internet, for the price,” said a former MySpace executive who insisted on anonymity in order to maintain friendships and business relationships with News Corp.
The former executive said MySpace became something of a distraction for News Corp., a company that does “very, very well on many fronts.”
“Yet on the earnings call, you have to hear about MySpace,” the person said.
As MySpace’s traffic diminished, the staff suffered through several rounds of cuts. Those who remained had braced themselves for further cuts at the time of the sale, and on Wednesday some packed up their belongings.
“Today should be a day,” Sean Percival, a vice president at MySpace, wrote on Twitter on Wednesday morning. Two hours later, he followed up, telling his online followers that Wednesday would be his last day at the company. Seemingly referring to the site’s rise and fall, he wrote, “It was a unique moment in time and an impossible problem to solve. Was proud to be a part of it.”
The News Corp., which is controlled by Rupert Murdoch, had been trying since last winter to rid itself of the unprofitable site. In preparation for the change in ownership, many of MySpace’s roughly 400 employees were dismissed on Wednesday. Mike Jones, the Web site’s chief executive, said in an internal memorandum that he would depart in the next two months.
The sale closes a complex chapter in the history of the Internet and of News Corp., which was widely envied by other media companies when it bagged MySpace in 2005. At that time MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure that soon soared to 70 million, but the network could not keep pace with Facebook, which overtook MySpace two years ago.
As users fled MySpace, so too did advertisers. The market research firm eMarketer estimates that the site will earn about $183 million in worldwide ad revenues this year, down from $605 million at its peak, when the site introduced many Web users and many advertisers to the concept of social networking.
“It’s a shame that MySpace’s value has diminished so severely since the acquisition; MySpace’s pioneering of social networking (now referred to as social media) will always be revered as igniting a new medium,” Richard Rosenblatt, the chairman of MySpace at the time of the sale to News Corp., said in an e-mail message.
Instead of envy, the News Corp. bet on MySpace now provokes punchlines. Tom Freston, who was fired as the chief executive of Viacom in part for failing to buy MySpace, joked in an interview with CNBC earlier this year that “I’m still waiting for a thank you note” from the Viacom chairman Sumner Redstone.
Mr. Freston, who was in Iceland on Wednesday and was smiling at the news of an impending sale, declined to comment.
At the News Corp. on Wednesday, relief over the sale was appreciable. An advertising deal with Google helped the company to recoup what it spent on MySpace in the first place, but the site became a burden on the company’s earnings; by last year executives were calling the losses unacceptable.
The News Corp. division that houses MySpace and other digital properties has only turned a profit once in the last six years.
What doomed the site? Lee Brenner, the director of MySpace’s now-defunct “Impact” section, wrote in a blog post on Tuesday, “I’m sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace’s downfall. Any number of these could be true. I suppose we’ll never know for sure. It is most likely a combination of these factors, along with a ‘low attention span’ public. It probably didn’t help to be doing business, and trying to grow, along with all of these issues, in the midst of a global economic crisis.”
MySpace has attempted to reboot itself several times, most recently as a social destination for music, movies and other media. It has not been abandoned altogether; it still has 35 million visitors a month in the U.S., according to the measurement firm ComScore. Facebook has 157 million visitors a month in the U.S.
“It’s still one of the biggest pockets of traffic on the Internet, for the price,” said a former MySpace executive who insisted on anonymity in order to maintain friendships and business relationships with News Corp.
The former executive said MySpace became something of a distraction for News Corp., a company that does “very, very well on many fronts.”
“Yet on the earnings call, you have to hear about MySpace,” the person said.
As MySpace’s traffic diminished, the staff suffered through several rounds of cuts. Those who remained had braced themselves for further cuts at the time of the sale, and on Wednesday some packed up their belongings.
“Today should be a day,” Sean Percival, a vice president at MySpace, wrote on Twitter on Wednesday morning. Two hours later, he followed up, telling his online followers that Wednesday would be his last day at the company. Seemingly referring to the site’s rise and fall, he wrote, “It was a unique moment in time and an impossible problem to solve. Was proud to be a part of it.”
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